Whether you’re a new business owner or an established owner looking to maintain and improve your business operations, without a doubt, the key is solid, well-planned budgeting. The way you budget affects every other facet of your organization, and this is true across the board. But budgeting can be intimidating, and many people avoid it out of fear.
At K9, we wanted to share our five rules for budgeting for small business. First, let’s briefly discuss why budgeting matters.
Why Budgeting Matters
A good budget is the foundation of a good business. A budget allows companies to more accurately make plans for their fiscal year: set realistic goals, sensible limits, and priorities. A budget enables enterprises to evaluate the health and performance of their company over the year. This, of course, helps in planning for the next year.
A good budget history can also be a saving grace if you’re ever in need of a small business loan. Banks and lenders will want to see evidence of strong budgeting, and if they don’t, that could be enough for them to deny your much-needed finances.
The 5 Rules for Budgeting A Small Business
You don’t need to be afraid of budgeting. Read on for our five best business budgeting tips to help get you started.
1. Be Realistic
When you’re budgeting for your small business, you must be as realistic as possible. You should set your sights on a number using performance and future estimates as a base as much as possible. If anything, you’ll want to overestimate your expenses for your budget. That way, you have more room to adjust throughout the year.
2. Be Flexible
Another crucial thing to keep in mind when you’re budgeting is that it can change. On the contrary, your budget should be reviewed and updated monthly, especially if you’re new to budgeting, keep detailed records of your expenses and income, and adjust the budget for the next month as necessary. Track your sales and use them for projections. This practice will also keep you well aware of how well your company is performing.
3. Know Your Business
The best budgets come from a team of people from within the company who truly know the business. As a business owner, you might have a better idea of the big picture, but the devil is in the details when it comes to budgeting. You should gather individuals from every department so that you have precise insight into what each one will require for optimum functioning. You’ll need to become intimately acquainted with every aspect of your business.
4. Continue to Cut Where You Can
Part of getting to know your budget better and reviewing your budget is always keeping an eye for where you can limit spending. Is there a more cost-effective brand of coffee you can serve in the breakroom? Is there a vendor that’s over-charging you? Be vigilant for ways to save yourself money, because as we’re sure you know, that will only benefit you and your employees in the end.
5. Research the Industry
If you’re recently starting out in your small business venture, all this might still seem foreign to you. You don’t have any past sales, so how are you supposed to make a reasonable projection? Before you start up your business, you need to make sure you’ve thoroughly researched the industry you’re going to be joining.
Most of the data you’ll need is accessible online. Things to look for when you’re conducting your research are your competition’s most common revenue sources and expenses. Be aware of more specific things as well, such as tax law changes and overtime laws. Of course, your business is going to have unique challenges, but you should be able to make a solid starting budge after researching the industry.
K9 Resorts is proud to be a franchise that supports its branches fully, including with all their budgeting needs and business budgeting tips. Check us out here!